Description

United States Consumer & Retail Report Q4 2017 Description

While we retain our broadly positive outlook for the US consumer heading towards 2018, amida tight labour market, robust consumer confidence and stronger economic growth, we note a number ofheadwinds to this view. Mediocre wage growth, higher oil prices from Storm Harvey, and ongoing policyparalysis in Washington, which will likely disappoint households and lead to watered-down tax cuts,present downside risks to consumer spending prospects.

Latest Developments

Our Country Risk team have downgraded our 2018 real GDP growth forecast for the US from 2.2% to2.1%, below consensus expectations of 2.3% (which in turn have come down from 2.4% since thebeginning of 2017).

While we are generally constructive on the prospects for US consumers, we expect a solid albeitunimpressive growth trajectory for private consumption ahead. We forecast real private consumptiongrowth to continue to moderate from 3.6% in 2015, and 2.7% in 2016, to 2.7% in 2017, and subsequently2.2% in 2018.